On June 23rd, Britons across UK voted to leave the European Union (EU) by the smallest ever margin. The unexpected vote took the country, government and markets by surprise. While Theresa May has suggested that Article 50 will not be invoked this year, we are still none the wiser on what the potential impact of Brexit to the country or to organisations. And what will HR’s role be to support this transition.
To understand what mitigation steps need to be developed, we would need to consider the most likely option – a best ‘guesstimate’ if you will – on the potential routes UK could take post Brexit to maintain diplomatic as well as trade relations with the rest of EU.
Based on existing agreements negotiated already with countries that are not part of the EU, there are a number of possibilities, from joining the European Economic Area (EEA) (‘The Norwegian Option’), bilateral treaty agreement (‘The Swiss Option’) to completely out (‘The World Trade Organisation Option’).
From the time Article 50 is triggered, the full impact of Brexit will not be seen for a minimum of at least two years (can be longer, if needed) and will vary based on negotiations that are due to happen. Organisations need to recognise that change is inevitable and should start to prepare for possible scenarios that could impact the country – including how we work with a reduced European workforce, or even a possible recession. It’s not all doom and gloom though, since Brexit will also create opportunities.
What should organisations be doing to protect themselves and their employees?
Like two sides of a coin, Brexit can be either seen as an opportunity or a threat, depending on the industry or sector that is going to feel the impact. For both employers and the HR community, there is ambiguity and uncertainty on the way forward. However, good employers should start preparing the organisation and its employees what may arise in the next two years. Some of the many potential risks that organisations would need to consider are:
- The “war for talent” i.e., does the organisation have a view on the workforce and talent that is required both now and in the immediate future to operate? What are the skills and capabilities that are needed (with the potential loss of existing EEA staff from the UK)? How are these gaps being addressed?
- Moving operations outside UK i.e., loss of passporting rights may drive some financial services organisations to set up operations in other countries like Ireland. What workforce and reward strategies are being planned to support operations being moved to a different location?
- Potential impact on global mobility costs and working on mitigating any potential immigration impact arising in the next two years which could include supporting visa applications, or training staff to fill the gaps.
- Potential changes to employment law in the UK and impact on the organisation (e.g., Temporary Agency Work Directive, etc.)
Due to the potential disruption that may hit the market, for most organisations the key agenda will not only be to sustain a profitable business but also manage its key assets.This should include their people. HR can play an effective role as a strategic partner by:
- Supporting the business proactively by sharing strategies and providing insights gauged through market trends as well as movements within the organisation (internal and external factors)
- Supporting the organisation in making key decisions on the way forward and driving the changes that are due to come
What next for you as an organisation?
It is too early to say yet what the consequences will be of our departure from the EU. In the meantime, there is preparation work that can be done, such as:
- Being informed by keeping up to date with key decisions being made prior and after Article 50 is invoked.
- Engaging and communicating with employees to reassure them that no immediate changes will be made and managing the expectations of both UK and EU nationals. Also to keep them informed of any future decisions and changes in a timely manner.
- Building an effective workforce planning strategy – ensuring that people risks are part of the Board’s agenda which include lobbying for the right training and education to be in place to support forthcoming skills gaps
- Reviewing mitigation strategies – for example, would it be possible to train for gaps via a special scheme by your organisation? Are there strategies to employ those are currently difficult to employ? Does the location of the business need to be in a high employment area?
- Building an empowered employer brand – by ensuring that the employee proposition is a good one to enable good workers to be attracted compared to the competition
Change is inevitable, what it is, as of yet, we are unsure. However, as trusted advisors (HR) should engage and collaborate with their organisations to not only help manage the change but build a maturity model on what the future workforce with look like in any eventuality and build contingencies to address potential risks(including flexibility in planning an budgets to mitigate years of uncertainty). While the UK government are still figuring out how they will manage Brexit, what is worth asking is, have you considered the impact of Brexit in your organisation? If so, have you considered building a strategy to help build a fool proof of mitigating any impact of Brexit?